New Delhi: Vedanta Resources, the parent company of Indian mining major Vedanta, has successfully reduced its gross debt to $6.4 billion by paying off all its maturing loans and bonds due in May and June. This significant reduction of $3.3 billion since the company’s deleveraging ambition announcement in March 2022 was confirmed in a stock exchange update.
The London-headquartered Vedanta Resources aims to continue reducing its debt burden throughout the remainder of the fiscal year 2024, aiming to lower its gross debt to zero. The company expressed confidence in achieving this target, citing expectations of solid demand, particularly in India, and the exceptional operational performance of its world-class asset base.
While the recent debt reduction is encouraging, Vedanta Resources faces a moment of reckoning as it has $2 billion worth of bonds due in 2024, representing a record annual obligation for the company. Pricing data suggests investors still harbour concerns about the company’s ability to meet future repayment obligations.
Despite these challenges, Vedanta Resources remains committed to its debt reduction strategy. The company’s gross debt has progressively declined from $9.7 billion in March 2022 to $6.8 billion in April 2023 and now to $6.4 billion in May and June 2023.
During a town hall meeting with shareholders, Vedanta Chairman Anil Agarwal expressed his vision of transforming Vedanta Resources into a zero-debt company within the next few years. He also clarified that there are no plans to pledge additional shares to Glencore International AG, as VRL had already pledged 4.4% of its overall holding in Vedanta to Glencore in exchange for a $250 million loan. The loan agreement between VRL and Glencore was signed on May 25.
Regarding potential acquisitions and opportunities such as NMDC Steel, Agarwal stated that he would consider them as they arise. He also provided an update on the reopening of the Sterlite Copper plant, stating that it would resume operations shortly, pending the completion of maintenance work. In April, the Supreme Court granted permission for Vedanta to undertake maintenance activities at the Sterlite plant in Tamil Nadu based on the report of a committee formed by the state government to assess the plant’s structural and civil safety.
Looking ahead, Agarwal outlined his ambitious vision for the next decade, aiming to transform Vedanta into a company valued at more than $1 trillion. He emphasized the goal of achieving self-sufficiency by producing copper and oil & gas within India, and he expressed his eagerness to promote investment in the country, highlighting India’s status as the world’s largest democracy and its immense demand potential.
